The Fed Can Implement Open Market Operations

question 28

Multiple Choice

The Fed can implement open market operations

• A)more rapidly than changes in reserve requirements, but less rapidly than changes in the discount rate.
• B)more rapidly than changes in the discount rate, but less rapidly than changes in reserve requirements.
• C)less rapidly than either changes in the discount rate or changes in reserve requirements.
• D)more rapidly than either changes in the discount rate or changes in reserve requirements.

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Definitions:

Compounded Monthly

The method of computing interest monthly, taking into account both the original amount of money and the interest that has been added over time.

Life Of The Loan

Life of the loan refers to the duration over which the loan is to be repaid, from inception to the final payment.

Monthly Payments

Regular amounts paid monthly, often related to loans or leases.

Compounded Monthly

The process where the interest earned on an investment is added to the principal, and future interest payments are then calculated on the new principal amount on a monthly basis.